Marketing and Selling to Chinese Businesses

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Marketing And Selling To Chinese BusinessesA White Paper by Matthew Harrison and Mark Hedley of B2B International

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B2B InternationalMARKET RESEARCH WITH INTELLIGENCE

B2B International (www.b2binternational.com)UK: +44 (0)161 440 6000 US: +1 914 761 1909

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INTRODUCTION

The question of how to market and sell to companies based in China is one that is debated

endlessly by foreign companies seeking to profit from the huge potential of the country.

Views expressed by businesspeople claiming to know the secret of success in China vary

wildly, from those (generally newcomers) who say that marketing and selling in China is just

like home through to those (usually those with at least a couple of years experience in

China) who exaggerate the unique nature of Chinese business and Chinese people to such an

extent that selling in China sounds like an impossibility. The reality is that these two

positions are both equally crass and incorrect there is no reason why a Western company

with a flexible, patient and listening approach to marketing and sales should not succeed in

the Chinese market.

As Chinese companies have developed over the past decade, they have rapidly become

more sophisticated in their business systems and practices, creating both opportunities and

challenges for Western businesses. Although ongoing East-West cultural differences

continue to pose challenges to foreign enterprises carrying out marketing in China,

companies that make an effort to understand such variations and integrate them into their

marketing strategies stand a greater chance of succeeding in the China market.

This paper is based on past surveys of Chinese business opinion in the two key cities of

Beijing and Shanghai, comprising 100 in-depth interviews with business owners and senior

purchasers. Companies of all sizes were interviewed, from those turning over US$1.5m

through to multinational organisations. Companies were divided into quotas to ensure a

cross-section of different types of manufacturing and service companies.

The principal aim of this paper is to dispel some of the myths propagated about Chinese

business, and explore the reasons behind both successful and unsuccessful marketing and

sales approaches in China.


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CHINESEATTITUDESTOWARDSMARKETINGAND SALES

When discussing Chinese attitudes towards marketing and sales, it is important to make the

distinction between the different types of companies operating in China. Marketing staff

employed by western multinationals typically have more heightened awareness of

marketing concepts than local Chinese companies, often employing expatriates or returneeoverseas students with MBAs in senior marketing positions. With such large variations in

marketing practices among different types of companies in China, foreign companies are

best advised to take a flexible approach to sales and marketing.

In general, the principle of marketing in business-to-business markets is less widely

recognised in China than in more mature markets. Commonly, marketing is viewed as a task

for the sales department, its role sometimes viewed as little more than taking care of the

company logo and brochures. In short, marketing is defined by many in Chinese businesses

as consisting of only the promotion element of the 4 Ps. Product is the job of engineers,

price the job of salesforces and place the job of senior management. At worst, marketing

departments are derided as spending departments, their apparently superficial output seenas a poor substitute for the relationships that are so important in a Chinese business

environment.

Figure 1 The 4 Ps Of Marketing

In contrast to some Western markets, the salesperson and more broadly the principle of

selling are more widely respected in China. Two issues perhaps lie at the core of this fact:

firstly, the entrepreneurial spirit of the Chinese people, and secondly the great importance

placed on relationships in business decision-making. A good salesman must be adept at

forging not only relationships, but also friendships with potential customers. The

importance of relationship-building tends to imply a long sales process, requiring of

salespeople patience, continual learning and an on-the-ground presence.


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HOWDO CHINESE COMPANIESWANTTOBETARGETED?

In order to appreciate how good Western companies are at targeting potential Chinese

customers, it is worthwhile considering how Chinese companies prefer to be targeted by

potential suppliers. As in other markets, the answer to this question is that a wide range of

marketing and sales techniques can work, and usually a combination of different methods isnecessary. Figure 2 illustrates the general view of the Chinese business community:

Figure 2 Communicating With Chinese Clients

What are your most and least favouredways of hearing about a suppliers product or

service?

Conferences and exhibitions

In many Western markets, conferences and exhibitions are often derided as a waste of time

and money. In Asia, and particularly China, nothing could be further from the truth. In most

industries and market sectors, attendance at exhibitions, conferences and similar events can

be essential for any company looking to achieve substantial or sustained success in China.

Such events are an excellent way of making initial contact with customers, and can also be a

good means of moving a potential sales relationship forward relatively quickly. They are a

way of gaining trust, and are an opportunity for the target market to compare local andinternational offerings, establishing the supplier as open. The events are an opportunity

for potential customers to ask questions, and have the advantage of establishing the face-to-

face contact which Chinese buyers value so much. More importantly, they help to persuade

buyers that companies are committed to the local market, by virtue of the fact that they

have physically devoted the time and expense to be there.

All big cities have conference and exhibition centres (Beijing has seven, for example) and

details of their events can be found simply by contacting the centres directly or looking at

their websites. The Events Eye is an English language website that gives details of Chinese


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exhibitions across different industries and cities, and can be found on

www.eventseye.com/fairs/event_l41.html(see Figure 3 below).

Figure 3 www.eventseye.com(China section)

Although some of the larger exhibitions cover multiple industry sectors and are bigger in

scale, most exhibitions are limited to a specific industry area. The size and scope of these

exhibitions varies greatly, and it is advisable to do some background research before

deciding which exhibition to attend. Looking over exhibitor lists from past exhibitions is a

useful way of gauging the profile of an exhibition. Similarly, the location of an exhibition is

often significant. While the larger, more influential expos tend to be located in Tier 1 cities

such as Beijing, Shanghai and Guangzhou, exhibitions located in Tier 2 and 3 cities are more

likely to have a higher proportion of smaller local companies than multinationals. Similarly,

exhibitions located near to industry clusters are likely to have more key industry players in

attendance.

It is also worthwhile remembering that exhibitions are an indirect form of marketing and

seldom result in immediate sales leads in the short term. The benefits of attending such

exhibitions can seem frustratingly intangible to Western companies, since there is no way to

assess their true impact on sales. It may be the case that Chinese businesspeople are

culturally disposed to over-emphasise the importance of trade shows and exhibitions,

although it is also the case that companies that fail to attend key exhibitions can create a

negative impression with customers just by virtue of being absent.

Email

Email is now the primary means of communication for any Chinese company that regularly

deals with foreign customers or suppliers. Email is extremely important at all stages of thesales process, but particularly at the introduction stage Chinese buyers tend to react

positively to a well-structured, personalised email as a prelude to a more detailed face-to-

face discussion. Such an email would usually be accompanied by a soft copy brochure that

gives general information on the suppliers offering. Although the level of English spoken in

China is continually improving, sending a Chinese version of company literature is usually

recommended in order to grab a buyers attention and avoid any potential

misunderstandings.
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As discussed below, however, it is usually essential to make a call to the target company

before sending company details through cold, non-personalised messages are extremely

unlikely to be taken seriously.

Websites

The number of internet users in China now exceeds 400 million, which makes China the

worlds largest online community. As such, most Chinese companies have a website and are

increasingly using online and digital marketing as the principal means through which they

communicate with their customers. A clear and attractive company website that conveys acompanys product or service offering is therefore vital to generating interest from Chinese

businesses. As with direct email and fax communication, having a Chinese version of

company websites is also essential, both enabling the company to communicate with a

greater target audience and clearly demonstrating the companys commitment to the China

market.

Having a well structured, navigable and informative website can also help differentiate

Western companies from local competition, since many Chinese buyers are extremely

critical of the standard of Chinese companies websites, seeing them as badly designed,

lacking in information and generally unprofessional. An informative homepage is therefore

an unmet need that Western companies are well placed to meet.

Blogging, social networking sites, online communities

92% of Chinese netizens use some form of social media, whilst many consumers regularly

post messages on online forums or blogs. As in Western markets, the huge popularity of

such social media in China offers good low-cost and effective promotion and marketing

channels for both b2c and b2b vendors. A mistrust of traditional media channels and

advertising, along with the heightened significance of networking within Chinese society

makes China especially suited to marketing through these types of social media. For

example, many Chinese buyers and technical staff often use online communities to evaluate

products and services they are planning to buy.

With sites such as Twitter and Facebook currently being blocked by the Chinese government,

the social networking sites popular in China tend to be quite different from those commonly

used in the West. LinkedIn has a large take-up among English-speaking Chinese

businesspeople, and other local Chinese language sites such as Tianji and Wealink are also

becoming increasingly popular business networking sites. Figure 4 lists the most popular

social networking and blogging sites in China.

Taking advantage of such online media presents many challenges to foreign companies.

Foreign enterprises may need to dedicate resources to translate press releases and

discussion topics into Chinese, and be active in keeping blogs and profiles fully up to date.


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Figure 4 Social Networking Sites in China

Source:www.TechCrunch.com(5th

August 2009)

Face-to-face meetings in the workplace

Face-to-face meetings in the workplace are an essential step towards making a sale in most

business markets. Only when a face-to-face appointment is secured can it be assumed that

the enquiry is a serious one. As in the West, Chinese buyers are busy people and prefer forsuppliers to visit them at their offices, unless negotiations are at an advanced stage and the

client wants to visit the suppliers production facilities to look at the scale of the operation.

Being able to speak at least basic Chinese is a good way to impress and show respect to a

potential customer, and it can help to build rapport with the customer at an early stage.

Although being able to speak Chinese fluently is often helpful, many senior Chinese

executives at multinationals and larger private companies can speak English, whilst

interpreters can also be used to avoid any misunderstandings caused by language

differences.

Phone callsMaking phone calls to Chinese companies is an effective way of making an initial

introduction, and above all in identifying key decision makers within an organisation. It is

recommended to call target companies to make a self-introduction before sending any e-

mail correspondence, to ensure that company documentation is sent to the right person,

and that someone in the target company is expecting the information. The high turnover

rate of Chinese employees, even in senior positions, means that buyers change frequently,

and a quick phone call is often useful to confirm the name and contact details of the key

contact person.
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Although the telephone is a valued means of communication during the sales process, its

limitations should be recognised. In summary, it should be used for introductory and

relatively low-level discussions, such as arranging meetings or clarifying points from a

meeting. It is extremely unlikely that negotiations will be conducted or sales made over the

phone, unless the contract is particularly small or there is already an established relationship

with the customer. To put it succinctly, cold-calling campaigns are very effective at

establishing contacts and beginning a relationship, but utterly ineffective when it comes to

negotiating or closing sales.

Sending details by post

Whilst the postal service in China is efficient, the growth in email and internet use is such

that it is increasingly acceptable, maybe even expected, for company literature and other

details to be sent electronically. Hard copy brochures and presentations are used widely,

but these tend to be presented during one-to-one meetings.

Where literature is being sent on a wider scale (the main example being a direct marketing

campaign) then the postal service is perfectly acceptable. Indeed for non-personalised or

mass communications, hard copy is usually more effective (assuming that good contact

details have been obtained), as junk emails are routinely deleted. Many businesses statethat receiving good-quality company literature through the post is such a rare occurrence,

that companies who succeed at doing it well do make an impact. Western-style campaigns

in particular tend to have impact, especially if the materials are bilingual. As with websites

and other media, a successful campaign can depend on appearing both Western (usually

synonymous with good quality) and Chinese (knowledgeable about China, and willing to

adapt to Chinese requirements).

Relationships and Networking

Chinese guanxi is critical to how Chinese companies do business, although the whole

concept can be alien to many foreigners. Guanxi refers to ones network of personal

relationships, which can be drawn on in a business context. Similarly, the concept of guanximeans that business relationships can often transform into personal friendships, and indeed

many Chinese businesspeople consciously spend a great deal of time and energy nurturing

such relationships. This can take the form of banqueting, evening entertainment or gift-

giving activities that can seem onerous and unnecessary to many Westerners.

Although such networking and relationship-building is clearly important to the sales process

in China, there is a tendency among some commentators to overemphasise its importance

when trying to penetrate the Chinese market. As in any market, building strong relationships

is extremely important to achieving market success, although guanxi is no substitute for a

strong product offering or a trustworthy supplier. What Western companies sometimes have

difficulty coming to terms with is the way in which this trust is gained, and the time it oftentakes to convince the customer that yours is the product or service that meets their needs.

The overriding piece of advice for Western companies would be to understand the

importance of establishing relationships when targeting Chinese companies, and to be

prepared for the patience required for this.

In conclusion, therefore, a wide-ranging marketing and sales approach is required in China,

with different activities complementing each other, and working at different times in


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different ways. The table below summarises the main means of communication with

Chinese companies, and the benefits and drawbacks of each.

Figure 5 Marketing And Sales Communications In China Summary Of What To

Use, And When

Communications Approach When To Use

Exhibitions and conferences Regularly but strategically, to establish the first contactwith new customers and to maintain brand awareness in

the market.

Email After initial contact has been established, use an email to

introduce the company, and specific products and services

that may be of interest, in more detail.

Website An easily found, easily navigated and easily understood

website is essential at all points during the sales process

and beyond. A good site will be referred to again and again

before, during and after the sale.

Online Media Business networking sites such as LinkedIn and Tianji can be

used for networking purposes, whilst blogging sites can beused effectively for product promotion and as a forum to

gauge market feedback.

Face-to-face meetings This is essential, but only under the right circumstances.

Workplace meetings should be used to move the

relationship forward, once the potential customer has

shown some interest. Deals will almost always be closed in

face-to-face meetings.

Phone calls As a first contact, in order to locate the correct person.

However, avoid trying to sell or negotiate over the phone

this should usually be done face-to-face. Obviously

phone calls can be used for informal discussions and tokeep in contact between meetings.

Post Direct mail can be an effective way of generating initial

interest. Contrary to popular belief, the Chinese are, if

anything, more receptive to direct mail than most

Westerners.

Networking An important complement to marketing effort at all times.

Relevant events should be attended, and business

relationships developed to the maximum.

WHATMESSAGESMUSTWESTERNBUSINESSES COMMUNICATE?

Successful marketing communicates to a target audience that its needs can be met by a

particular suppliers offering. Any marketing campaign should have at its core the

communication of the target markets needs. With this in mind, it is essential to consider

what Chinese businesses require from potential Western suppliers. We have excluded

price from our analysis, taking this as a given.


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Figure 6 Main Chinese Requirements From Western Businesses (Other Than Price)

Communicating superior quality

Unsurprisingly, the main requirement Chinese buyers have from potential Western suppliers

is to provide market-leading quality. Indeed, this is a hygiene requirement, in that the

minimum a Western company must do is justify its higher prices vis--vis the local

competition. In other words, the companys offering must add value in the eyes of the

buyer.

Communicating superior value in Chinese business-to-business markets is more challenging

than it once was. In large part due to their higher cost base, most Western companies tend

to target the top end of their markets, although in many business-to-business markets the

premium that can be charged for Western products is rapidly decreasing. Although these

trends vary greatly between different markets, in general four key reasons can be identified

for this:

1) Increasing numbers of foreign companies are competing with each other, driving

down prices

2) Improving quality of the local offering, eroding Western companies competitive

advantage

3) The ability of local companies to communicate their offering is increasing

4) International companies based in China localising management and procurement

positions, resulting in a greater willingness to buy local

Communicating experience and credentials

Two of the top four requirements of Chinese buyers and business owners the need for

Western companies to prove that they are established in the market, and the need for

them to demonstrate experience of dealing with similar companies (preferably in China),

illustrate the difficulty many Western companies have in gaining the trust of their target

audience. As previously noted, business trust in China is often developed through

relationships. However, important as these are, the first thing any Western company should


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do is prepare and present comprehensive case studies and client lists for the potential

Chinese customer. These should be leveraged to the absolute maximum, and from the

earliest possible stage in the relationship. This is in contrast to many Western markets,

where past experience is often mentioned in the vaguest terms and references are rarely

followed up.

This need to communicate relevant past experience cannot be overstated and relates to

perhaps the biggest barrier facing any Western company (particularly new entrants) in China the time and effort required to gain the target markets trust.

Leveraging the brand

The challenge of gaining trust can be turned into an advantage if the Western company

leverages its brand to the maximum. When approaching a potential customer for the first

time, a companys brand can communicate experience and credentials in the same way as a

case study or reference. Even if the company is unknown in China, the brand of The West

can be a real plus, and at the very least generate curiosity in the companys offering. Most

Chinese people continue to associate Western brands with quality, and this confers

immediate advantages in terms of brand perceptions, regardless of how accurate this is.

Communicating reliability

Reliability typically refers to quality of service as opposed to quality of product. Chinese

buyers are extremely demanding in terms of their service requirements on issues as diverse

as lead time, availability after hours and technical service. When dealing with Western

companies, Chinese businesses feel they are paying for top quality, and when technical

issues arise they therefore expect them to be dealt with quickly and efficiently.

A key challenge in respect of such needs is communicating that the Western supplier has an

established and permanent presence and infrastructure within China. There is a great deal

of wariness regarding Western companies who are happy to export their products to China

and charge significantly more than local competition, but are not willing to offer on-the-ground after-sales support.

This need acts as further justification for foreign companies investing in some form of local

presence in China, especially where companies have product or service offerings that

require more in-depth technical support. Another option to address this problem is to utilise

distribution partners and other intermediaries to provide technical support, although finding

a trustworthy local partner also comes with its attendant challenges.

Communicating understanding, and willingness to meet needs

Chinese buyers state emphatically that they want Western companies to show an

understanding of their needs, but also a willingness to listen to and learn from the buyer. Afrequent comment is that Westerners turn off buyers by spending far too much time

talking about what they can offer, and far too little time building up their understanding of

what the customer requires, and what is driving that requirement.

Chinese buyers do not expect suppliers to understand their needs immediately, and prefer

suppliers to listen carefully to the issues facing the business, and commence a dialogue

which begins to identify their needs and put forward ways of meeting these needs.

Suppliers who claim to have the solution as soon as they begin talking to the potential

customer are seen as crass, nave and untrustworthy. On the other hand, suppliers who


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listen, understand and suggest are seen as understanding the problem, qualified to give a

solution and willing to work for the benefit of the customer.

Being easy to work with

As well as being reliable in a business sense, Chinese buyers state that they want suppliers

that are easy to deal with, and who engage with them on a personal level. Companies that

are unwilling to take the discussion outside the workplace are often seen as unfriendly and

more significantly hard to get to know, perhaps willfully so. The latter can be fatal to apotential business relationship, in an environment where gaining trust is fundamental.

CHINESEBUYERSEXPERIENCEOFWESTERN COMPANIES

It is clear that Western companies are doing their utmost to market themselves to Chinese

businesses. Over half of all companies included in our study state that they have been

targeted by 20 or more Western businesses within the last year alone. 41% of companies

maintain that they are targeted by Western companies at least as frequently as they are by

Chinese companies. Whatever the views we arrive at in terms of the execution of Westernmarketing and sales campaigns in China, the determination of Western companies is beyond

doubt. Chinese businesses are now being targeted on a large scale, not only as low-cost

suppliers but for their burgeoning purchasing power.

Means of communication How well do Western businesses perform?

It is true to say that the most effective way of targeting a potential customer is not

necessarily the way in which that potential customer asks to be targeted. Nevertheless, it is

informative to compare the approach of Western companies with the preference of the

Chinese target market. If nothing else, a company that perceives a supplier to be

approaching him in a suitable fashion is more likely to be well-disposed towards that

supplier, particularly when it is a supplier that has not been used before. Figure 6 showshow Western selling approaches correspond to the main means of communication desired

by the target Chinese audience.

Figure 7 How Well Do Western Companies Choose Their Marketing & Sales

Approaches In China?


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Strong communication through online media

When comparing the communications approach of Western companies with the preference

of the target Chinese businesses, it can be seen that Westerners strengths and weaknesses

fall into two distinct areas. On the positive side, Western companies are seen as excellent in

terms of their ability to communicate through online media. The efforts made by Western

companies to communicate in Chinese are recognised, and above all Westerners are seen as

presenting themselves extremely professionally and clearly.

A typical remark made by a Chinese businessperson in our study was Western companies

are excellent at using their websites to tell you exactly what they offer, and how it can

benefit you. They get straight to the point. Chinese companies tell you about their people

and what industry they are in but dont really tell you what they do. In written business

communications, this directness and clarity is a distinct quality which many Western

companies are using to their advantage.

Weak interpersonal communication

Perhaps unsurprisingly, Westerners abilities are seen as lacking in terms of interpersonal

contact. This manifests itself in a perceived unwillingness to attend events, visit the clientsworkplace, or even to make phone calls. Good as Western companies written

communications often are, complementing this with verbal and particularly face-to-face

interpersonal contact is essential. One of the most commonly mentioned and extreme

differences between supplier-client contact in Western companies, in comparison with

China, is Westerners tendency to think that work is work and that it is therefore limited to

the workplace. In China, relationship-building and negotiations take place not only during

the working day, but also at a restaurant afterwards. Taking a business guest for a meal is a

basic common courtesy. The comment below is typical:

The British dont understand Chinese culture. Their technology and quality check

system is mature and comprehensive, and they are professional in their field andeverything they do. They are polite, but that is not enough. Wed like to invite them

to join our supper after finishing working, but they cant understand and will go back

to the hotel directly.

HOWWELLDOWESTERNERSGETTHEIRMESSAGEACROSS?

It has been seen that the means by which Westerners seek to communicate with potential

Chinese customers leaves room for improvement. Perhaps more important is the question

of the messages Western companies actually convey, and how well these correspond to

what the target market wants to hear.

There are a number of messages that most Western companies communicate extremely

effectively, and others where the correct message is not being heard. On the positive side,

Western companies are seen as synonymous with high quality and professionalism,

something which is exemplified not only in the products and services being bought, but

throughout every aspect of the organisation. Conversely, Western companies are seen as

inflexible in a number of ways, ranging from the product or service specification through to

negotiations and procurement procedures.


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High quality products and professionalism

Most Chinese buyers start from the position that the offering will be high quality when they

begin to evaluate a Western company, and that usually turns out to be the case. In other

words, it would appear that Western companies are doing a good job overall in terms of

meeting their clients product and service requirements.

General professionalism is seen as a key distinguishing factor between Western and local

Chinese companies. This manifests in many ways, ranging from the product itself, through

to company literature, appearance and knowledge of staff, and paperwork. Many Chinese

buyers and business owners describe Western companies as more systematic and organised

than their Chinese counterparts:

German companies are extremely polite, professional and systematic. The

paperwork is always in order and the products are well made and durable. They

work seriously with strict principles.

Poor ability to listenAn inability to listen is a common criticism of Western companies amongst Chinese buyers.

The importance of this cannot be overstated, and this relates partly to the need to show

respect to any potential customer. Most importantly, only by studying customers

requirements and how they evolve in China, can any company hope to engage with and

meet the needs of Chinese companies.

In general, the process leading up to the sale of a product or service in Western markets is

clearly structured (see Figure 8 overleaf). It begins within a department inside the

customer company, where the need for a particular product or service is identified and

then broadly scoped. This typically gives rise to the construction of a briefing document or

spec, in which the broad requirement is more closely defined. Thirdly, potential suppliersare searched for, and the spec discussed with or sent to a number of them. This may lead

to some fine-tuning of the spec. Proposals are then prepared, there is sometimes a little

more scoping and negotiating, and then the decision is made.


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Figure 8 Decision Making In The West

Within Chinese companies each stage of this process runs more or less concurrently.

Typically, the initial contact with potential suppliers happens at a relatively early stage, when

the definition of the customers need is still developing. It may not even be certain that the

product or service in question is actually needed. The potential supplier therefore becomes

a participant not only in the definition of how the need can be met, but also in the definition

of the need itself. Briefing documents are rare, as are structured tender procedures.

Indeed, there is a huge opportunity for the company that successfully assists the Chinese

business in the definition of its need, in that there is a high likelihood that the same

company will be asked to meet the need it has just defined.

Figure 9 Decision Making In China

Of course, there are a number of unknowns. The Chinese buyer may well be speaking to

various other potential suppliers, who will be defining the customers need in entirely

different ways, meaning that the nature and extent of the competition will remain

something of a mystery. Equally, for more defined product requirements, supplier

benchmarking is a standard practice among Chinese buyers, and foreign companies should

be aware that receiving an RFQ does not necessarily mean a buyer has a genuine interest in

its product offering.


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The role of suppliers as definers of their potential customers needs is one reason for the

longer sales process in China and other Asian markets. Almost by definition, the initial

enquiry to the supplier is rather vague, meaning that a number of interactions between

supplier and buyer will be necessary before it has even been decided what the customer

requires. This in turn elevates further the importance of trust and an ability to establish a

strong and trusting relationship with the potential customer. All of this means that the

successful salesperson will be the person who listens to and takes account of the clients

constantly evolving requirements, rather than the person who dives in by specifying asolution and writing a proposal as soon as an enquiry has been received.

Many Western companies dont know our requirement; indeed they promote their

product blindly. Of course, we want the machinery with comprehensive and precise

function as much as possible. However, they always emphasise that their products

are good looking. As for low prices, we care for it definitely, but quality is the most

important for us.

Therefore, Western companies are prone not to communicating their message in the wrong

way; rather they tend to make a far more basic mistake: they refuse to listen, and therefore

communicate completely the wrong message.

Tendency towards exaggeration

Whilst the quality of Western companies marketing communications and the knowledge of

their salespeople is seen as a real strength, there is a feeling amongst Chinese buyers that

this can lead to a tendency to exaggerate the qualities of the company, product or service in

question. This can damage trust, something which usually proves fatal to any attempt to sell

to a Chinese business.

Chinese businesses are now experienced at dealing with Western companies, who have

been contacting them as potential suppliers or customers for a number of years. This has

led Chinese companies to look out for early signs of potential problems, and many areparticularly wary of new entrants from the West whose infrastructure or product offering

may not yet be established in, or tailored to, the Chinese market. Chinese buyers are

particularly adept at asking questions that get to the core of exactly what a suppliers

offering is, and equally good at picking up exaggeration, something which is seen as

symptomatic of a new entrant desperate for a sale.

Unwillingness to negotiate

Linked to Western companies perceived unwillingness or inability to listen is a similar ill

disposition towards negotiation. This may well relate to the fact (already discussed) that

definition of the customers needs and definition of how to meet those needs tend to

happen concurrently rather than sequentially in China. This can make Western companiesfeel unsure of exactly what they are negotiating about, something they tend to try to resolve

by insisting on more structured negotiations.

Western companies are also prone to showing a sheer unwillingness (rather than inability)

to negotiate, even walking away when the going gets tough, wrongly assuming that all

differences are irreconcilable. This is absolutely the wrong approach in China, where

negotiations are extensive and the opening price is almost never the price the customer

ends up paying.


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Their attitude to working is active, but they always make the same mistake that our

disagreement cant be resolved in time, and walk away.

Rigid purchasing procedures are a frequent complaint, as is a tendency for companies to

regard certain issues as simply out of bounds at the negotiating table. Some Western

corporations are restricted by minimum profit margin requirements imposed by their

foreign headquarters, which can inhibit their ability to negotiate on price or to use loss-

leaders to establish market share in the early stages of business development. Similarly,many Western companies are unwilling to tailor their offerings sufficiently to the Chinese

market, whether in terms of product specification, lead-time, payment terms or other

customer requirements.

The Chinese approach to completing deals usually involves many rounds of negotiation, and

often a large number of people from different levels within an organisation will be involved

in the negotiating process. Even when tacit agreements are in place, contracts can often be

redrawn several times before a final agreement is in place, which can be frustrating to

foreign businesspeople unfamiliar with Chinese negotiating practices.

WHYDOWESTERN COMPANIESGET ITWRONG?

Before moving on to discuss what changes foreign companies can make to improve their

marketing and selling approaches, it is worth considering why Western companies often

target the Chinese market in an inappropriate way. There are a number of reasons for this

lack of understanding about how to market in China, most of which largely stem from a lack

of experience.

Life cycle

Some of the mistakes made by Western companies in terms of their marketing and salesapproaches and messages can be explained by the fact that their Chinese activities are

relatively new. Companies are providing solutions to needs which have only just emerged,

and mutual understanding between buyers and suppliers is still developing.

There has been a strong tendency for Western companies to undervalue the importance of

marketing in China, seeing it as something that takes place not at the beginning of the

product life cycle, but once channel access and market penetration have been achieved.

This is extremely surprising, given the sophistication of marketing techniques in the West,

and may result from a lack of knowledge of the target market, as well as a lack of confidence

that marketing techniques will be successful.

Focus on product, channels and price, rather than promotion

If Chinese companies tend to regard promotion as the only aspect of marketing, there is an

opposing tendency for Western companies in China not to pay promotion enough attention.

Many Western companies entering the market first carry out some kind of channel (place)

research, as well as an examination of the likely prices the market will bear. They have

usually given a good level of consideration as to which products will appeal, albeit with

insufficient thought to how these will need refining. Company resources have been thrown

into understanding the size and nature of the market opportunity, with much less emphasis

placed on how that opportunity should be communicated directly with the target market.


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We know best

A valid criticism made by Chinese businesses of their Western counterparts is that they

sometimes appear hard-wired into thinking that everything they do is automatically superior

to the local competition. Essentially, Western companies forget that marketing is about the

profitable satisfaction of needs, and that if a need is different in China to the West, then the

value proposition must also be different. There is often a tendency to try to re-educate

Chinese buyers, rather than simply providing a value proposition that meets the marketsexisting needs.

Marketing is a Western discipline its less important in China

Some Western companies, many of them guided by Western market entry consultants, tend

to overstate the importance of relationship-building in China, in that they see it as a

substitute to marketing effort, rather than a complement. Good salespeople are sometimes

left stranded alone in a small representative office, with no marketing capability to

complement or assist them.

Communication problems

It cannot be denied that there remains a significant language barrier between Chinese andWestern companies, albeit one that is closing as huge numbers of Chinese businesspeople

learn English and increasing numbers of Westerners learn Chinese. Once companies need to

interact at an operational rather than strategic level, linguistic difference can often cause

miscommunication and result in problems.

TIPSFOR SUCCESSFULSELLING INCHINA

So, based on our own experience of selling in China, and in particular the experience of our

clients and survey respondents, are there any golden rules that can be used by foreign

companies looking to market and sell in Chinese business-to-business markets? The answeris, of course, that there are differences by industry, geography and a host of other factors.

However, we would argue that it is perfectly achievable for a Western company to succeed

in the Chinese market, so long as it remembers the basics of marketing and is prepared to

adapt these to the local environment:

1. Remember the marketing basics Product, price, place and promotion are all

important. All should be researched before and after market entry, in order to

ensure that the value proposition meets and continues to meet the target markets

needs.

2. Patience Patience is required when applying the marketing basics to the local

market. In particular, the sales process is longer and more complex than in Westernmarkets, and local buyers will take time to be convinced that a Western company

has the local credentials to meet their needs.

3. Listen Only by listening will you be able to understand and therefore meet the

local market needs. Chinese companies do not want to buy a product or service that

has come straight off a shelf in the West.

4. Relationships Focus, but do not over-focus, on relationships. Any salesperson

must be prepared to be friends with a potential supplier. However, this is as well

as, not instead of, the 4 Ps of the marketing mix.


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5. Be confident in your quality Western companies start from a strong position, in

that they are usually assumed to have excellent quality. Focus on the value you add,

and be prepared to explain why you can add value in China specifically.

6. Be methodical One of the qualities that defines Western businesses is their

methodical approach to doing business. It is clear that when this turns into a dogma

about how business should be done, Chinese companies quickly lose interest in your

offering. However, do not be afraid to highlight the methodical nature of your

offering, as this is something that is valued by Chinese businesspeople and seen tobe lacking in some Chinese businesses.

7. Be flexible Flexibility on issues such as product, service, payment terms and price

is vital for success in the China market. Foreign companies should do their best to

identify and meet Chinese customers real needs rather than assuming these needs

mirror those of customers in the West.

8. Be prepared for plenty of negotiation Any potential supplier should be prepared

for plenty of negotiation when selling to Chinese businesses. It is almost

inconceivable that first proposals will be accepted. Keep in mind the fact that

buyers may be deliberately benchmarking suppliers, and always try to reserve

sufficient margin for further price reductions at a later stage.

9. Avoid exaggeration Focus on the credentials you have, rather than exaggerating tomake up for perceived deficiencies. Above all, Chinese companies want to trust

their suppliers.


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Marketing and Selling to Chinese Businesses